Aug 28
What Is a Agreement in Principle
When purchasing a property, the process can be long and complicated. One of the first steps is obtaining an agreement in principle, also known as a mortgage in principle or decision in principle. In this article, we will discuss what an agreement in principle is and why it is important.
What is an agreement in principle?
An agreement in principle is a document issued by a mortgage lender that outlines how much they are willing to lend you based on your financial circumstances. It is not a formal mortgage offer, but rather an indication of what you could potentially borrow. The lender will assess your income, credit history, and other factors to determine whether you are eligible for a mortgage and how much you can borrow.
Why is an agreement in principle important?
Obtaining an agreement in principle can give you a head start when shopping for a property. It can help you determine how much you can afford and give you an idea of what properties are within your budget. Additionally, having an agreement in principle can make you a more attractive buyer to sellers, as they know you have taken steps to secure financing.
How do you obtain an agreement in principle?
To obtain an agreement in principle, you will need to complete a mortgage application and provide information about your financial circumstances. This can include your income, employment status, credit history, and any outstanding debts or obligations. The lender will use this information to assess your eligibility for a mortgage and determine how much they are willing to lend you.
It is important to note that obtaining an agreement in principle does not guarantee that you will be granted a mortgage. The lender will still need to conduct a full affordability assessment and property valuation before issuing a formal mortgage offer.
In conclusion, obtaining an agreement in principle is an important step in the property buying process. It can help you understand how much you can afford and make you a more attractive buyer to sellers. If you are considering purchasing a property, it is recommended that you speak to a mortgage advisor about obtaining an agreement in principle.